High-performance organizations invest in employee development through training and by rotating people through roles and responsibilities. These experiences are a powerful motivational and retention tool that can trump compensation and other financial incentives. They also encourage collaboration and reduce the likelihood of parochial leadership behavior. By the time employees reach the top ranks, they have a broad view of the organization.

Another thing I do... is call references and then ask the references, "Who else should I talk to?" Often the reference has been set up in advance and is a good friend of the entrepreneur. And sometimes he will know something negative about the entrepreneur that he doesn't want to personally disclose. So when I ask that reference for another reference, he can steer me to someone who will tell me what he thinks I ought to know, without worrying that he has betrayed the entrepreneur. It's a good strategy for hiring situations as well.

P&G used to recruit for values, brains, accomplishment, and leadership. We still look for these qualities, but we also look for agility and flexibility. We believe the “soft” skills of emotional intelligence — fundamental social skills such as self-awareness, self-fulfillment, and empathy — are needed to complement the traditional IQ skills.

If you fear that your company has a shortage of leaders, you will buy solutions from any number of consultants and gurus eager to charge you a lot of money to fix problems you don’t actually have. I am a frugal HR professional, though, and I’m 100 percent sure you don’t lack leadership. You lack a way to identify and cultivate existing employees who can take your company to the next level.

The typical U.S. company spends nearly fifty times more to recruit a $100,000 executive than it will invest in his annual training.

Experience is hardly unimportant, but it’s the type of experience that counts. There’s experience performing tasks, and then there’s experience performing skills. Sometimes, the two are identical—like, say, having the ability to work with a specific database. But even that capability—like any technical skill—can be learned and is secondary to having superior learning agility. Companies ought to spend less time hunting for people who can carry out a laundry list of rote tasks and more effort finding candidates who can demonstrate overriding behavioral skills.

High-performing companies align people management practices to the corporate culture (“cultural fit”) and to the business strategy and long-term objectives of the organization (“strategic fit”). This tight coupling of internal practices, culture and strategy remains unique for each organization and is difficult for competitors to imitate. While rivals can poach a few employees or can try to mimic some strategic moves, rarely will they be able to penetrate the lattice of internal fit, cultural fit and strategic fit.

Originally devised to analyze the individual needs of a company's most-profitable customers, Net Promoter® Score (NPS®) is equally powerful in understanding the work-life requirements of a company's employees. As opposed to standard "satisfaction inquiries," NPS reveals people's willingness to stake their personal reputation on the product, service or organization in question.

Here's how NPS works: Participants rate the "would recommend" question on a zero-to- 10 scale. Those who give a nine or 10 are "promoters"-people who are true advocates of the organization and drive positive outcomes, such as customers who create additional revenue or talent that helps to deliver great results for the organization. Those who rate a company from zero to six are "detractors"-they are liabilities who eviscerate growth and retention. Subtracting the percentage of detractors (liabilities) from the percentage of promoters (assets) yields the Net Promoter Score. In essence, the higher the NPS score, the better the outcomes for companies; the lower, the more corrective actions are needed. Focused on a company's pressured high performers, NPS tracking can not only help identify potential burnouts among the most valuable workers before they depart, but it can also help determine the best human resources strategies to keep them.

The bad decisions we make about who we promote to management come back to haunt us again and again.

When the business is successfully chugging along but has not yet peaked, executives feel that operations can be leaner—they’ve moved far down the learning curve by then—and meaner, since they are under pressure to boost margins. They will then reduce both headcount and investments in talent, and will increasingly focus on talent that can best execute the existing business model. This has the perverse effect of driving away the very people—the entrepreneurial risk takers and business builder types—best able to help them reinvent the business.

During interviews, we love when potential hires ask questions. But all questions aren't equal. A red flag goes up when someone asks how. "How do I do that?" "How can I find out this or that?" You want people who ask why, not how. Why is good -- it's a sign of deep interest in a subject. It signals a healthy dose of curiosity. How is a sign that someone isn't used to figuring things out for him- or herself. How is a sign that this person is going to be a drain on others. Avoid hows.

All you can do in your company—and you'd better do it—is find out the strengths of the people who work for you and place them where their strengths can produce results, so that there is satisfaction. At present, we are focused on the weaknesses of people. When I talk to my clients about Joe, they say Joe cannot do this and Joe cannot do that. Then I get annoyed and say, if Joe cannot do anything, why is he still your employee? If you want to build a relationship with Joe, find out what Joe's good at and make sure he gets to do that kind of work. That way you build the desire for achievement, the respect for management. And that's what people want to have. We just make it awfully hard for them.

Executives have to be in the job long enough, not only for their successes to visit them, but for their failures to visit them. We all have both.

Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. But if they don't have the first, the other two will kill you.

Downsizing has a negative effect on corporate memory and employee morale, disrupts social networks, causes a loss of knowledge, and disrupts learning networks. As a result, downsizing risks handicapping and damaging the learning capacity of organizations. Further, given that downsizing is often associated with cutting costs, downsizing firms may provide less training for their employees, recruit less externally, and reduce the research and development budget. Consequently, downsizing could “hollow out” the firm’s skills capacity.

There are two things to say about downsizing: It seldom works and is often done incorrectly.

When you try to measure people's performance, you have to take into account how they are going to react. Inevitably, people will figure out how to get the number you want at the expense of what you are not measuring, including things you can't measure, such as morale and customer goodwill. ...incentive plans based on measuring performance always backfire. Not sometimes. Always. What you measure is inevitably a proxy for the outcome you want, and even though you may think that all you have to do is tweak the incentives to boost sales, you can't.

The problem with most incentive systems is not that they are too complicated -- it's that they don't explicitly forbid the kind of shenanigans that will inevitably make them unsuccessful.

Some people seem to have unlimited self-generated morale. These almost always succeed. At the other extreme, there are people who seem to have no ability to do this; they need a boss to motivate them. In the middle there is a large band of people who have some, but not unlimited, ability to motivate themselves. These can succeed through careful morale management (and some luck).

Organizations, like individuals, need to be in flow to operate smoothly. An organization achieves this state of equilibrium through its management layers. In other words, an organization can approach the flow zone when the positions in its hierarchy have clear, accountable tasks that are aligned to its mission and that match the skills and reach of the people at each level. Or as University of Auckland Business School lecturer Judith McMorland puts it, the key diagnostic can be summed up in two simple questions: “Are you big enough for your job?” and “Is your job big enough for you?” If the answer to both is “yes” throughout the organization, then it is in flow.

If a job has its own discrete decision-making responsibilities, different from those in positions above and below, then the individual in that job feels accountable. He or she has a clear understanding of who the boss is, what the boss expects, why the boss needs particular results, when those deliverables are needed, how those deliverables fit with the organization’s goals, and how to accomplish them. The individual is then free to “own” the job, to organize it accordingly, to deploy the resources at hand, and to enter the flow zone.

An organization’s conception of human capital is manifest in its culture, and culture is inculcated by process and behavior guidelines that are passed along as one employee imitates another. The process is most effective when the capacity for self-expression in the ranks is consonant with expectations set at the top and an autonomous spirit flourishes.

If you hire people who are smaller than you are, we shall become a company of dwarfs. If you hire people who are bigger than you are, we shall become a company of giants.

Labour markets move more slowly than people think. People in their work lives may like this idea of being 'footloose and fancy free', but in the whole of their lives, they're a little less radical. We’re revolutionaries with mortgages. So don't assume that everyone is 23 and wants to go someplace new tomorrow.

Incentives are good in principle, but did Bear Stearns get competent risk management in return for the $4.4 billion bonus pool it distributed in 2006? Does any organization have to give its CEO a $40 million bonus to secure his services? If you pay people enough money to make any future payment beside the point, don’t be surprised when they take vast long-term risks for short-term wins. In almost any pattern, overshooting produces negative returns.